Putin’s Ukrainian Triumph Is a Major Setback for Russia

(Eurasia Daily Monitor) The Ukrainian government’s shocking decision to put on hold the process of finalizing the Association Agreement with the European Union, announced last Thursday (November 21), a week prior the momentous Eastern Partnership summit in Vilnius, could be interpreted as Russia’s success in sabotaging Kyiv’s “European choice” (see EDM, November 22). President Vladimir Putin expressed his resolute disapproval of the long-prepared EU-Ukraine agreement two months ago at the pompous meeting of the Valdai Club. And he now prepares to savor the triumph of his ill will, while accusing the EU of attempting to “blackmail” Ukraine to cancel the cancellation (http://ria.ru/world/20131122/979024045.html). The absurdity of this accusation is underscored by the fact that he personally orchestrated the most blatant bullying of Ukraine’s leadership and made President Viktor Yanukovych a proverbial offer that could not be refused at the “secret” meeting staged on November 9, at the Novo-Ogarevo presidential residence outside Moscow (http://lenta.ru/articles/2013/11/22/fail/). In reality, however, this forced turn in Ukraine’s maneuvering between the EU and Russia could signify a major setback for Russia’s own needs to re-energize the country’s modernization.

It is the economy that is commonly assumed to be the central subject in tri-lateral controversies, and indeed, Russia’s not-so-gentle squeeze on Ukraine’s exports has seriously aggravated the latter’s economic troubles. Kyiv cannot realistically expect that an agreement with the EU would compensate for the sanctions that Moscow has threatened to apply, but neither can it cope with the demands from the International Monetary Fund to eliminate subsidies and cut the budget deficit (http://polit.ru/article/2013/11/22/al221113/). Yanukovich may, on the other hand, count on tangible economic “gifts” from Russia—first of all a discount on the natural gas price, which determines Ukraine’s trade deficit (Nezavisimaya Gazeta, November 18). Putin, however, is not known for a generous disposition, particularly at the expense of Gazprom, which still has a market capitalization some 60 percent lower than in mid-2008; he is deeply worried about the stagnation of Russia’s economy that pulls the federal budget into the “red zone” (Kommersant, Novye izvestiya, November 21). Consequently, instead of a respite from its downward economic spiral, Ukraine might experience a painful crisis spasm if it links its economy too closely to Russia’s (http://www.forbes.ru/mneniya-column/mir/247736-vo-chto-oboidetsya-ukraine-otkaz-ot-assotsiatsii-s-evrosoyuzom). […]